Current:Home > ScamsGroup sues Texas over law banning state business with firms “boycotting” fossil fuels -AssetLink
Group sues Texas over law banning state business with firms “boycotting” fossil fuels
View
Date:2025-04-15 02:10:50
A progressive business group sued Texas on Thursday over a 2021 law that restricts state investments in companies that, according to the state, “boycott” the fossil fuel industry.
The American Sustainable Business Coalition filed suit against Attorney General Ken Paxton and Comptroller Glenn Hegar, alleging that the law, Senate Bill 13, constitutes viewpoint discrimination and denies companies due process, in violation of the First and Fourteenth Amendments. The group asked a federal judge in Austin to declare the statute unconstitutional and permanently block the state from enforcing it.
“Texas has long presented itself as a business-friendly state where limited state regulation facilitates the ability of businesses to conduct themselves as they see fit,” lawyers for the group wrote. “Yet in 2021, the Legislature passed SB 13 to coerce and punish businesses that have articulated, publicized, or achieved goals to reduce reliance on fossil fuels.”
Known as the “anti-ESG law” — which stands for “environmental, social and governance” — Senate Bill 13 requires state entities, including state pension funds and the enormous K-12 school endowment, to divest from companies that have reduced or cut ties with the oil and gas sector and that Texas officials deem antagonistic to the fossil fuel industry.
In approving the legislation, Republican officials looked to protect Texas oil and gas companies and to bite back at Wall Street investors pulling financial support from the industry in an effort to incorporate climate risk into their investments and respond to pressure to divest from fossil fuels, which play an outsized role in accelerating the climate crisis.
In March, Texas Permanent School Fund, Austin, cut ties with BlackRock, which managed roughly $8.5 billion of the $52.3 billion endowment and which was listed by Texas as one of the companies that should not handle state business.
The statute defines “boycott” as, “without an ordinary business purpose, refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations with” a fossil fuel company. It also prohibits state agencies from doing business with a firm unless it affirms that it does not boycott energy companies. And it charges the state comptroller with preparing and maintaining a blacklist of companies based on “publicly available information” and “written verification” from the company.
In a statement, Hegar, the comptroller, called the lawsuit an “absurd” attempt to “force the state of Texas and Texas taxpayers to invest their own money in a manner inconsistent with their values and detrimental to their own economic well-being.”
“This left-wing group suing Texas,” he said, “is hiding their true intent: to force companies to follow a radical environmental agenda that is often contrary to the interests of their shareholders and to punish those companies that do not fall into lockstep and put politics above earnings.”
Paxton’s office did not immediately reply to a request for comment.
Texas has blacklisted more than 370 investment firms and funds, including BlackRock and funds within major banks like Goldman Sachs and J.P. Morgan. BlackRock, among other companies, pushed back on its designation as “boycotting” fossil fuels, calling the decision “not a fact-based judgment” and citing over $100 billion in investments in Texas energy companies.
“Elected and appointed public officials have a duty to act in the best interests of the people they serve,” a BlackRock spokesperson said at the time. “Politicizing state pension funds, restricting access to investments, and impacting the financial returns of retirees, is not consistent with that duty.”
In Thursday’s suit, the American Sustainable Business Coalition argued that the physical and financial risks posed by climate change are a legitimate investment and business consideration and cause for efforts to reduce carbon emissions.
The group said the Texas law was enacted to go after what Republican lawmakers saw as a “burgeoning fossil fuel discrimination movement,” and that it effectively “infringes rights of free speech and association under a scheme of politicized viewpoint discrimination” and allows Texas officials to “punish companies they believe are insufficiently supportive of the fossil fuel industry.”
The group argued that the law penalizes companies for their energy policies and membership in certain business associations, and compels them to adopt positions that align with Texas officials “as a condition” of doing business with state entities.
The suit also alleged that the law violates companies’ right to due process because vagueness in the statute “encourages arbitrary enforcement” and fails to provide blacklisted companies a fair process to contest their designation.
Texas blacklisted “the flagship investment funds” of Etho Capital and Sphere, two climate-focused firms represented by the American Sustainable Business Coalition, according to the lawsuit.
“Among ASBC’s many projects are efforts to encourage sustainable investing and sustainable business practices,” the lawsuit reads. “These are all cornerstones of the modern Texas economy. Yet, SB 13 takes aim at, and punishes, companies that speak about, aspire to, and achieve this goal.”
___
This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.
veryGood! (8)
Related
- Intel's stock did something it hasn't done since 2022
- Do wealthy countries owe poorer ones for climate change? One country wrote up a bill
- Extremist Futures
- Love Is Blind's Paul Peden Accuses Vanessa Lachey of Having Personal Bias at Reunion
- The Daily Money: Spending more on holiday travel?
- The first day of fall marks the autumn equinox, which is different from a solstice
- The Weeknd’s HBO Show The Idol Has a Premiere Date and a Flashy New Trailer
- Federal money is now headed to states for building up fast EV chargers on highways
- Are Instagram, Facebook and WhatsApp down? Meta says most issues resolved after outages
- Bebe Rexha Addresses Upsetting Interest in Her Weight Gain
Ranking
- Former Danish minister for Greenland discusses Trump's push to acquire island
- Never Have I Ever Star Jaren Lewison Talks His Top Self-Care Items, From Ice Cream to Aftershave
- We're Obsessed With the Mermaidcore Aesthetic for Summer: 17 Wearable Pieces to Take on the Trend
- Prince William and Kate Middleton Share Unseen Photo of Queen Elizabeth II With Family Before Death
- Which apps offer encrypted messaging? How to switch and what to know after feds’ warning
- Threats to water and biodiversity are linked. A new U.S. envoy role tackles them both
- 1923 Star Brandon Sklenar Joins Blake Lively in It Ends With Us
- 11 killed in arson attack at bar in northern Mexico
Recommendation
Former Danish minister for Greenland discusses Trump's push to acquire island
Western New York gets buried under 6 feet of snow in some areas
How to save a slow growing tree species
How ancient seeds from the Fertile Crescent could help save us from climate change
Jamie Foxx reps say actor was hit in face by a glass at birthday dinner, needed stitches
Climate solutions do exist. These 6 experts detail what they look like
AI is predicting the world is likely to hit a key warming threshold in 10-12 years
Do Your Eye Makeup in 30 Seconds and Save 42% On These Tarte Products